Four Charts For What’s Next

The Index of Gold on The Screen.

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Silver is the fast horse, and old jockeys like myself see this as a top. However, “it ain’t necessarily so,” because the upside in a bubble is hard to guess and can go much further than expected – especially for grizzled veterans.

$100 was always a target and a magnet for me, so I’m out of silver. But superbulls see $200 an ounce. Here is a chart of that expectation:

All I see is the vertical phase of a bubble, and after hefty returns, it’s time to leave the action to the young guns.

Gold is a different story.

It’s at the beginning of a bubble or even the end of a boom. I don’t think its bubble vertical is with us yet. Obviously $10,000 is the price magnet, but I will be sweating at $8,000 – and $5,000 would really be enough for me if it weren’t for what my voodoo charts are telling me.

Here is a chart:

(Yes I know you can draw a bigger parabola, but let’s hold back for now.)

Now on to platinum. For me, this is a strategic metal that should trade 1:1 with gold. The puny 200 tonnes a year of production is simply not enough now that the internal combustion engine is no longer headed for the scrap heap. Platinum was cheap as chips when electric cars were expected to replace gas guzzlers, but that is no longer the case. What’s more, platinum is as good as gold as a precious-metal brand, so it is going to catch up. A 1:1 ratio represents huge upside as gold continues to run.

Here is a chart – and to be honest, it’s hard to even guess a top:

However, if you but platinum back-to-back with gold and silver, it’s easy to gauge what’s going on:

Platinum is lagging gold, as you would expect in the ranking of precious metal brands. If gold continues to run, so will platinum – and it will likely go further.

Palladium is platinum ‘s catalyst brother. It’s worth remembering that palladium cleans petrol exhaust, while platinum is used for diesel. If I’m right about platinum, palladium will run even harder. The chart is so tempting it’s difficult not to get carried away. Palladium was recently much more expensive, and now we have many reasons for it to move well beyond its previous highs – let alone into the firmament that a silver-like run would imply.

It’s hard not to be enthusiastic, but it’s worth remembering that bubbles go up like a rocket and down like a rock – and silver will likely do this first. That’s going to be a shock at some point in the future. However, gold will drive the whole shebang, so it’s gold we should watch to set the pace.

Now that gold has cleared $5,000, things are going to get even more spicy.